Taxing a Platform: Transaction vs. Access Taxes

21 Pages Posted: 11 Aug 2015 Last revised: 21 Sep 2018

Date Written: September 4, 2018

Abstract

This paper studies the impact of taxes on a two-sided platform’s pricing, participation, and welfare. Two types of taxes are examined: a tax on access to the platform and a tax on transactions between the platform’s buyers and sellers. Access taxes have clear implications while transaction taxes are less straightforward. One result is that welfare increases with a transaction tax if the side of the market with the larger network effect has the smaller transaction tax burden. To highlight the main results, I determine the implications of potential tax policies on Airbnb, Amazon, and the video game market.

Keywords: Two-sided markets, Sales tax, Pass-through, Video games, Airbnb, Amazon

JEL Classification: D4, H22, H23, L5

Suggested Citation

Tremblay, Mark, Taxing a Platform: Transaction vs. Access Taxes (September 4, 2018). Available at SSRN: https://ssrn.com/abstract=2640248 or http://dx.doi.org/10.2139/ssrn.2640248

Mark Tremblay (Contact Author)

University of Nevada, Las Vegas ( email )

Las Vegas, NV 89154
United States

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